Eircom shares have recovered strongly after three days of selling and by the end of trading yesterday had recouped most of the recent heavy losses. Eircom shares closed up 32 cents on €2.90, but even at this level the shares are still well off the recent €3.35 high immediately following the bid for its fixed line business from Mr Denis O'Brien's e-Island consortium.

Dealers said, however, that the volume of Eircom shares traded yesterday was down on recent volumes when they were being aggressively sold in Dublin and London.

Dealers considered yesterday's activity in the shares mainly involved bargain-hunters who believed Eircom had been oversold.

Eircom's recovery was aided yesterday by the improvement in Vodafone shares and a generally better tone in the telecoms sector after the savaging the sector has endured in the past week as technology-based stock markets like Nasdaq, Techmark and the Neuer Markt slumped.

The fall in Vodafone shares was also partly down to unease at the delay in completing the sale of Eircell to Vodafone for €5.1 billion.

The negotiations on the sale of Eircell to Vodafone have hit several obstacles in recent weeks which have delayed the original timetable for the sale of the mobile phone subsidiary.

Issues that remain to be resolved include the relationship between Eircom and Vodafone after the sale of Eircell. Vodafone wants to ensure that Eircom or its future owners do not begin to compete against a Vodafone-owned Eircell in the mobile sector and particularly that Eircom will not apply for a third generation mobile phone licence.